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Saturday, February 4, 2017

Govt to begin strategic sale of three PSUs; to merge another four

AFTER Finance Minister Arun Jaitley spelling out government’s disinvestment policy, it is ready for strategic sale of stakes in three PSUs. These are Bharat Pumps & Compressors, Bridge & Roof Co and Hindustan Fluorocarbons. Government plans to sell its stake to strategic buyers.
The FM has also made it clear that PSUs will be merged for creating a stronger entity. Accordingly, the Finance Ministry wants to merge four PSUs -- Hindustan Prefab, Engineering Projects (India) Ltd, HSCC (India) Ltd and National Projects Construction Corporation -- with similarly-placed PSUs.
The government intends to divest 100 per cent equity in Bharat Pumps & Compressors Ltd through strategic... sale with transfer of management control.
The Cabinet, in September, had cleared the strategic sale of the Allahabad-based PSU, which is into manufacturing and supply of heavy-duty pumps, CNG gas cylinders required in petroleum exploration and refineries and the fertilisers and power sectors.
Further, the government wants to go in for strategic sale of 99.53 per cent equity and transfer of management control in Bridge & Roof Company, which is under the control of the Ministry of Heavy Industries.
The Miniratna PSU operates in the engineering and construction sector.
The Department of Investment and Public Asset Management (DIPAM) is scouting for investment bankers and legal advisors to carry forward the transactions.
Furthermore, the government plans to sell the entire 56.43 per cent shareholding of Hindustan Organic Chemicals Ltd (HOCL) in Hindustan Fluorocarbons (HFL) through strategic sale.
The Ministry of Chemicals and Fertiliser is looking for advisors for the strategic sale of HFL, which is engaged in the manufacturing of polytetra fluoro ethylene and fluoro methane.
Besides strategic sale, the government intends to disinvest its entire shareholding in four PSUs by way of strategic disinvestment through merger with similarly placed CPSEs.
Finance Minister Arun Jaitley in his Budget speech had said there are opportunities to strengthen CPSEs through "consolidation, mergers and acquisitions" so that they can be integrated across the value chain of an industry. "It will give them capacity to bear higher risk, avail economies of scale, take higher investment decisions and create more value for stakeholders," Jaitley said. The government has budgeted to raise Rs 15,000 crore through strategic sale of PSUs next financial year.
Government said it will raise Rs 72,500 crore through disinvestment of PSUs, including listing of three railway PSUs IRCTC, IRFC and IRCON, and proposed merger and consolidation to create globally competitive public sector units. Finance Minister Arun Jaitley said the government will put in place a revised mechanism and procedure to ensure time-bound listing of identified CPSEs on stock exchanges as listing will foster greater public accountability and unlock their true value.
Jaitley said there are opportunities to strengthen CPSEs through “consolidation, mergers and acquisitions” so that they can be integrated across the value chain of an industry. “It will give them capacity to bear higher risk, avail economies of scale, take higher investment decisions and create more value for stakeholders. Possibilities of such restructuring are visible in the oil and gas sector.”